A plan for senior housing in downtown Wheaton narrowly has won city council approval despite opposition from some neighbors.

The council voted 4-3 this week to allow construction of a 167-unit facility on a site once slated for luxury condominiums as part of the Courthouse Square complex at the corner of Naperville Road and Willow Avenue.

Mayor Michael Gresk and council members Phil Suess, John Rutledge and Jeanne Ives voted in favor of the senior housing facility. Council members Evelyn Pacino Sanguinetti, Todd Scalzo and Tom Mouhelis opposed it.

The approval came after nine planning and zoning board meetings totaling more than 24 hours with testimony from experts, opponents and supporters. In a nearly unanimous vote in August, that board recommended the council deny the zoning plans.

The original proposal for the complex, supported by the council in 2004, called for a mix of townhouses and condos. But developers cited the housing market crash when they pulled the plug on what were supposed to be the second and third midrise buildings. Northfield-based Focus Development Inc. and West Chicago-based Airhart Construction Corp. partnered on the project.

The saga continued when developers asked to amend the plan to allow senior housing, angering some Courthouse Square residents who argued they were promised a strictly residential community when they bought their units.

Just last week, Gerald Gorski, a Wheaton-based attorney who lives in the complex, submitted a petition objecting to the developers' request.

Officials thought the petition might require a supermajority vote of the council to approve the senior housing plans, but city attorney James Knippen said it does not.

However, Knippen noted that if a lawsuit brought by Gorski and seven other residents against the developers succeeds, the petition could potentially prevail.

"I think we should leave matters to the hands of the court because their decision could impact any decision we make today," Councilwoman Evelyn Pacino Sanguinetti said during a council meeting this week.

Meanwhile, the complaint filed in DuPage County circuit court Monday names Focus Development Inc., Airhart Construction Corp., Courthouse Land Development LLC and the board of directors for the Community Association for the Courthouse Square Community Association as defendants.

The residents seek, among other things, injunctive relief and compensation for attorney fees.

"Simply put, we're trying to stop this project because it's inconsistent with what we bought into," Gorski said.

Among the accusations, the complaint alleges misrepresentation on the part of the developers, claiming they had employees make brochures and other related materials indicating Courthouse Square would be developed exclusively with upscale condos. The complaint says residents purchased their units based on those materials.

The complaint further alleges the developers have not turned over control of a community association to current owners of Courthouse Square as required by state law.

Gorski said the homeowners will meet this weekend to consider adding the city as a defendant.

Tim Anderson, president of Focus Development Inc., declined to comment.

Anderson said construction at the site is expected to begin in spring 2013.

"I think it was a very long process, and we're happy with the results," he said.

Another pressing issue surrounded the debate: The city would be on the hook for millions of dollars if nothing is built at the site.

The council in 2005 agreed to establish a tax increment financing district and to borrow $7.7 million to give to the developers upfront to support the project. The city provided the money by issuing $8.35 million in bonds.

Tax increment financing districts collect increased property tax revenues from redevelopment. The funds are earmarked for improvements within the district instead of going to taxing bodies such as schools and parks.

Now into its fourth year, the city has required the developers to make principal and interest payments on that borrowing because the money generated from the site has been insufficient to pay the debt service obligations. Beginning in June 2013, the payments, totaling a projected $2.5 million, would fall on the city if nothing happened to the site, City Manager Don Rose said.

"I think the last point -- and nobody really wants to speak to this -- is if we don't approve this (senior housing), what are we going to do?" Councilman Suess said. "How are we going to fund that $2.5 million?"

But changes to an agreement between the city and Courthouse Land Development LLC, also approved this week in a 4-3 vote, includes a provision that Anderson has agreed to guarantee payments up to $1.48 million.

"What is before us is a viable proposal that addresses that issue," Suess said.

Pacino Sanguinetti voted against what she called a "bailout," and questioned whether studies were done to determine if other uses were possible for the site.

"I maintain that ... Wheaton is not so desperate that anything will do," Pacino Sanguinetti said.

Councilwoman Jeanne Ives said she knows the developer did a complete analysis.

While Ives criticized the original plan for making taxpayers "speculative real estate investors," she argued the completion of Courthouse Square would add certainty to the downtown area.

"I applaud Focus Development, the owners of this land, for not simply walking away from the project, but spending almost two years working on a modification that complements the original plan and doesn't compete with what is already there," Ives said.

The proposed facility is expected to contain a mix of 55 independent-living units, 84 assisted-living units and 28 memory-care units.

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